It marks the second year of double-digit growth for the subsidiary of Netherlands-based Ikea Group in the fiscal year ended Aug. 31, and it more than doubled the 5.1 per cent pace of sales growth in the overall home furnishings retail category in Canada for the same period, according to data from Fusion Retail Analytics.

“Ikea has products that will fit every budget and it is known for that,” said George Minakakis, chief executive at Toronto-based consulting firm Inception Retail Group. It’s an advantageous strategy given that the redecoration cycle has sped up since the 1980s. Whereas households used to hold on to furniture, dining sets and décor for decades, consumers now purchase such items with a much shorter life span in mind.

“When you look at furniture as a category it is pretty much disposable,” Minakakis said. “People figure that they do not want to overpay when they can buy something that is in style for a good price.”

Ikea has also carved a niche for itself as an outfitter for small spaces, he said, capitalizing on the urbanization trend in Canada, he added. “As we move more and more to condos, it is becoming increasingly important.”

Ikea, the world’s largest furniture retailer with 391 stores in 48 countries, also enjoys a strong pricing advantage over competing retailers due to its in-house design and economies of scale.

The retailer, which opened its first Canadian store in 1976, currently has stores in British Columbia, Alberta, Winnipeg, Ontario and Quebec, and last year announced plans to double its current count of 12 large stores to 24 by 2025. Ikea also operates six smaller “pick-up and order” outlets in Ontario and Quebec that are one-tenth or less the size of an average store and serve smaller markets.

Ikea Canada also reported Tuesday that its online sales rose 41.3 per cent in 2016, while its in-store sales were up 12.7 per cent and customer visits climbed five per cent. That followed a strong 2015, when Ikea Canada’s sales rose 10.4 per cent.

Over the course of its fiscal year, Ikea Canada grew its market share in home furnishings by one per cent to 9.4 per cent, according to Fusion Retail Analytics. That’s up from a 5.8 per cent share in 2013.

Strong sales of home furnishings and appliances have been fuelled by the country’s robust housing market. Home prices were up 14.6 per cent year over year in October, according to Ottawa-based Canadian Real Estate Association, amid the lowest housing inventories in almost seven years.

In addition to Ikea, sales have been stellar at Leon’s Furniture Ltd., a Canadian retailer that also sells electronics and major appliances. In the nine-month period ended Sept. 30, Leon’s reported a systemwide sales increase of 5.2 per cent to $1.8 billion. Leon’s has occupied a bigger slice of the market since it purchased rival chain The Brick in 2013, and reported sales of $2.44 billion at its 300 stores in 2015.

Ikea

David McCabe, who became acting president of Ikea Canada in September, has worked for the retailer since 1996, beginning at a store in London. McCabe has since worked in the U.S., Sweden and Canada, where he has worked for the past five years in a range of senior roles. He spoke with Hollie Shaw Tuesday from the retailer’s office in Richmond, B.C.

Q:What was the top factor that made fiscal 2016 such a strong year for Ikea?

A: We really took a fresh look at how to put the customer at the centre of the business. We looked at how people want to interact with Ikea and we had an ambition to be more accessible across the country, and we were pleased to announce the new store in Halifax (in 2017). We also decided to look at different ways that we could support the customer, so we opened six pickup and order points as part of a global test to give more options to the customer to interact with us. I think that principle was one of the main reasons why we had such a successful year.

Q:How have the pickup and order points contributed to the business?

A: The pickup and order points themselves are all part of our home store sales, so it is all wrapped up in our growth this year. They have been very successful and they worked as we intended — some people are shopping online and visiting to pick up, other people are spending time in the unit touching and feeling the furniture and talking to associates. We have already have had 800,000 visits to the six locations — customers seem to really like them.

Q: How big of a part of the total business is e-commerce?

A: E-commerce represents about 7 per cent or 8 per cent of the total business now. We still see the store as being absolutely the core of our business. We know people want to interact with Ikea online and in different ways, but the store is where everything comes together.

Q: How do you think the housing market is affecting Ikea’s performance?

A: For sure it’s helping. We know when people move houses we are a first choice for people to invest in new furniture. And we know that Canadians are spending more time at home in Canada right now due to the weak Canadian dollar. People have an interest in investing in their home and we are helping contribute to that. It’s a good time.

Q: How much is the services aspect of the business growing, and are you adding any new services in Canada?

A: We have started one-on-one kitchen planning (at two Ontario locations) and that has been exceptionally popular, we maybe underestimated how popular it would be. You can come to a store and schedule a dedicated time slot with a co-worker in order to really dig into your dream kitchen and get everything you need. The response has been so fantastic we will roll it across the country now. The services business is growing in line with our total sales. We introduced flat-rate pricing and tried to make it much more simple for customers, so we see (services) as a big growth driver in the future as well.

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